Implementation of measures necessary to carry out reforms in Azerbaijan’s energy sector continues in accordance with the order of the head of state.
In an interview with Trend, Azerbaijan’s Energy Minister Parviz Shahbazov spoke about the implementation of important projects in the energy sector, as well as plans for the current and coming years.
- What was last year like from the point of view of implementing the tasks set for Azerbaijan’s energy sector?
- Last year, from the point of view of developing the energy sector and projects in this area, was quite effective for Azerbaijan. In particular, implementation of long-term strategy for the development of the energy sector of the Republic of Azerbaijan was started.
The president was presented with proposals on attracting private investment to this sector, encouraging the use of renewable energy sources, creating a favorable investment environment and supporting private entrepreneurship.
The proposals to improve the efficiency of the heat supply system in the country were also prepared and submitted to the head of state in 2019. Draft laws 'On Power Industry', 'On the use of renewable energy sources in electricity generation', as well as 'On regulation in the field of energy and utilities' were developed and submitted.
The implementation of measures to prepare new draft laws of Azerbaijan "On energy" and "On gas supply" began in 2019. After the adoption of proposals and bills, the execution process and a new stage of development in the energy sector will begin.
- What is the dynamics of development of cooperation between Azerbaijan and the International Renewable Energy Agency (IRENA)?
- Azerbaijan has been cooperating with IRENA since 2009, and has been a full member of the organization since 2014. During this time, the partnership relations between Azerbaijan and IRENA have developed significantly. The Renewables Readiness Assessment (RRA) project for Azerbaijan is an example of the country’s successful cooperation with IRENA.
Recommendations on this project were provided, ensuring creation of favorable investment environment in order to support using potential of renewable energy sources. Many of these recommendations are consistent with the steps taken by the ministry for the development of renewable energy.
At the same time, the preparation of the bill "On the use of renewable energy in the electricity generation" is one of the priority tasks set by the head of state as part of accelerating reforms in Azerbaijan's energy sector.
Increasing the share of renewable sources in electricity generation, developing this sector taking into account international experience and attracting private investment are the main priorities to which the president pays special attention. The signing of two relevant orders over the past year is an indicator of the special attention of the head of state to the field of alternative energy sources.
The draft bill, as well as drafts of other regulatory legal acts have been developed by the Energy Ministry taking into account the proposals of foreign investors and are under consideration. The adoption of the necessary legislative acts is one of the main processes ensuring the attraction of private investment in the renewable energy industry.
- How do you assess the cooperation between Azerbaijan and the US in the energy sector?
-The US has always been an important partner in all Azerbaijan’s initiatives, especially in the development and bringing hydrocarbon deposits to global markets. The US companies not only participated in the signing of the Contract of the Century, but also supported the development of new technologies in Azerbaijan.
In December 2019, a memorandum of understanding was signed between Azerbaijan’s state oil company SOCAR and the US Baker Hughes oil and gas company to develop and implement the concept of lean production at wells as part of exploration and production operations.
The letters from US President Donald Trump and Secretary of State Michael Pompeo in 2019, support for the Trans Adriatic Pipeline (TAP) project - an important segment of the Southern Gas Corridor, celebration of the 25th anniversary of the Contract of the Century in Washington, and the contacts established by new Energy Secretary Dan Brouillette and other senior officials in Azerbaijan show that the US attaches great importance to cooperation with Azerbaijan in the global energy security policy.
The US administration regards the Southern Gas Corridor as a project that ensures Europe’s energy security and serves to better integrate the Caspian region into European and global energy markets, and supports the project by presenting it at meetings of the Advisory Council of the project. Azerbaijan’s Energy Ministry is cooperating with the US Department of Energy, which has rich experience, technical capabilities and a modern laboratory in the field of renewable energy.
- How effective was the cooperation between Azerbaijan and the UK in the energy sector in 2019?
-The UK, as an important partner of Azerbaijan in the energy sector, has invested $28.4 billion in Azerbaijan’s economy to date. As a result of Azerbaijan’s partnership with BP, the share of UK investments in Azerbaijan’s oil sector amounted to about $26.5 billion. Azerbaijan’s cooperation with the UK, in particular with BP, has played an important role in the implementation of large-scale energy projects.
Beginning from this year, the ongoing project of the Southern Gas Corridor, will make significant contribution to Europe’s energy security. Projects regarding the second stage of development of Azeri-Chirag-Guneshli (ACG), Shafag Asiman fields, Block D-230, as well as the shallow part of the Absheron peninsula will ensure the development of cooperation at least until the middle of the century.
Besides, more than 20 years of successful bilateral cooperation in the energy industry creates the prerequisites for the diversification of relations between Azerbaijan and the BP. At present, Azerbaijan is actively cooperating with a number of companies, and, in particular, with BP to intensify cooperation in the field of using renewable energy sources and attracting investments in this sphere.
A memorandum of understanding was signed between Azerbaijani Ministry of Energy and BP Azerbaijan in 2018 to explore the potential for the development of renewable energy in Azerbaijan. Within this cooperation, BP Azerbaijan provided information on renewable energy sources and proposed relevant proposals.
Azerbaijan is interested in BP’s participation in auctions on providing the right to generate electricity in its territory through renewable energy sources.
- What joint projects will be implemented between Azerbaijan and France this year in the field of energy?
-Total, the French oil and gas company, which played an important role in Azerbaijan’s energy cooperation with France, is one of the first foreign energy companies in Azerbaijan that invested in the country’s oil and gas industry.
One of the shareholders of the Baku-Tbilisi-Ceyhan (BTC) main export pipeline, Total is currently the operator of the development and exploration of the Absheron field, which has significant gas and condensate reserves.
Drilling of a dual bore well has already been completed at the field in order to estimate the reserves and start extracting the gas. The first product is planned to be received in 2021. For the purpose of cooperation in the field of alternative energy with French Total Eren S.A. and Quadran International companies, corresponding documents were signed in 2019.
In the future, it is desirable that these French companies participate in auctions for granting the right to produce energy in the territory of renewable energy sources in Azerbaijan.
-At what level is it expected to reduce greenhouse gas emissions in the near future?
-The volume of greenhouse gases emitted into the atmosphere in Azerbaijan is planned to be reduced by 35 percent till 2030. Having signed the Paris Climate Agreement in April 2016, Azerbaijan assumed a commitment to keep an increase in the global temperature at two degrees Celsius. The country's greenhouse gas emissions into the atmosphere reached 73.3 million tons in carbon dioxide (CO2) equivalent in 1990.
Taking into account the fact that one of the sectors that generate carbon emissions is the electric power industry, it is important to achieve high results at power plants using natural gas and the latest technologies, increase efficiency of facilities, reduce fuel consumption and domestic power plant consumption and achieve energy efficiency.
The specific consumption of equivalent fuel for generating electricity at thermal power plant of Azerenergy OJSC amounted to 279.8 grams / kilowatt per hour in 2018 compared to 2009, decreasing by 50.2 grams / kilowatt per hour and amounted to over 1 million tons of conventional fuel.
The total losses in the electric power industry decreased by 10.5 percent and reached 41.6 percent due to the renewal of the 0.4-kilovolt network, the optimization of 6-10-kilovolt power plants, the installation of modern meters in 2018 compared to 2009.
Another progress is associated with the limitation of associated gas. If flaring reached 912.9 million cubic meters in 2012, then in 2018 this figure dropped up to 218 million cubic meters. A policy of increasing the share of renewable energy sources in generation of electricity will also contribute to a decrease in carbon emissions.
The share of renewable energy sources, including water resources, in the total power generation capacity in our country is 17 percent. We plan to bring this figure up to 30 percent by 2030, which, along with increasing energy security, will greatly reduce carbon emissions.
- What are the forecasts for the use of alternative energy sources in Azerbaijan in 2020?
-Azerbaijan has specific goals and a policy decision on increasing the share of renewable energy sources in electricity production. Due to renewable energy sources in the Strategic Road Map on the development of public utilities (electric and thermal energy, water and gas) in Azerbaijan, approved by the relevant decree of the Azerbaijani president in 2016, the creation of a new generating capacity of 420 megawatts is envisaged.
For this purpose, cooperation documents were signed with nine international energy companies, discussions were held, and proposals for the implementation of projects using wind and solar energy were received. Foreign financial partners are interested in investing in wind energy projects and cooperating with Azerbaijan in this field. At the initial stage, it is planned to implement pilot projects for 440 megawatts.
Under the decree of Azerbaijani president on measures for implementation of pilot projects in the use of renewable energy sources dated December 5, 2019, a commission was created, and seven working groups were formed to carry out the necessary activities.
Proposals on the allocation of land for pilot projects, the issuance of state guarantees to investors, the connection of power plants for projects to electric networks, and the strengthening of the network will be made within four months. Along with pilot projects, after the adoption of the law, an auction of projects in selected territories is planned.
With the support of the European Bank for Reconstruction and Development (EBRD), an auction preparation project is being implemented, within the framework of which work is underway to form a regulatory legal framework that manages auctions.
I believe that 2020 will be the beginning of a new stage in the development of renewable energy in Azerbaijan.
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